One bank that I have been a bit neutral on over the last year or so is Cullen/Frost Bankers, Inc. ( CFR ). With a market capitalization as of this writing of $7.19 billion, the enterprise is one ofCrude Value Insights offers you an investing service and community focused on oil and natural gas. We focus on cash flow and the companies that generate it, leading to value and growth prospects with real potential.Subscribers get to use a 50+ stock model account, in-depth cash flow analyses of E&P firms, and live ...

Core Viewpoint - Cullen/Frost Bankers, Inc. will host a conference call on May 1, 2025, to discuss its first quarter 2025 earnings [1] Group 1: Conference Call Details - The conference call will start at 1:00 p.m. Central Time (CT) and will be led by key executives including Phil Green, Chairman and CEO, Daniel J. Geddes, Group Executive Vice President and CFO, and A.B. Mendez, Senior Vice President and Director of Investor Relations [2] - A question and answer session will follow the prepared remarks, allowing analysts to engage with the executives [2] - Interested individuals can listen to the call via a provided telephone number or through a live webcast [3] Group 2: Access Information - The domestic telephone number for the conference call is 877-709-8150 [3] - The webcast will be archived and available for playback after 5:00 p.m. CT on the day of the call [3] - It is recommended that participants dial in 5 to 10 minutes early for efficient registration [4]

Core Insights - Frost Bank has achieved the highest ranking for retail banking customer satisfaction in Texas for 16 consecutive years according to the J.D. Power 2025 U.S. Retail Banking Satisfaction Study [1][3] - The bank scored an overall satisfaction index of 745, which is 68 points higher than the Texas region average [2] Customer Satisfaction Rankings - Frost Bank ranked No. 1 in six out of seven dimensions in the J.D. Power study: trust, people, account offerings, customer banking flexibility, time and money savings, and digital channels [2][3] - The J.D. Power study is recognized as the leading survey of consumer banking satisfaction in the United States, involving 110,000 customers [3] Company Overview - Frost Bank is a subsidiary of Cullen/Frost Bankers, Inc., which has $52.5 billion in assets as of December 31, 2024 [4] - The bank provides a comprehensive range of banking, investments, and insurance services across multiple regions in Texas [4]

Financial Performance and Position - Cullen/Frost had consolidated total assets of $52.5 billion as of December 31, 2024[17]. - Frost Bank, the principal operating subsidiary, reported total deposits of $43.1 billion at the same date[23]. - The estimated fair value of trust assets managed by Frost Bank was $51.4 billion, including managed assets of $26.2 billion and custody assets of $25.2 billion[25]. - The total amount of stock dividends received from the Federal Reserve by Frost Bank was $1.5 million in 2024, $1.4 million in 2023, and $1.2 million in 2022[39]. - Cullen/Frost could pay aggregate dividends of approximately $1.2 billion to Cullen/Frost without obtaining affirmative governmental approvals at December 31, 2024[47]. - As of December 31, 2024, Frost Bank was classified as "well capitalized" with a total risk-based capital ratio of 10.0% or greater, a CET1 capital ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, and a leverage ratio of 5.0% or greater[67]. Regulatory Compliance and Risks - Cullen/Frost is subject to extensive regulation under federal and state laws, impacting its operational flexibility[35]. - Cullen/Frost and Frost Bank are required to maintain a minimum Common Equity Tier 1 (CET1) ratio of 7.0% to comply with Basel III Capital Rules[59]. - The Federal Reserve Board requires prior approval for any acquisition of more than 5.0% of the voting shares of a commercial bank by a bank holding company[46]. - Cullen/Frost must comply with liquidity requirements, including maintaining an adequate level of unencumbered high-quality liquid assets[62]. - The Federal Reserve Board may impose limitations on a financial holding company's activities if it fails to meet capital and management requirements[45]. - The Basel III Capital Rules require a minimum Tier 1 capital ratio of 8.5% when including the capital conservation buffer[59]. - The Federal Reserve Board's policy restricts bank holding companies from paying dividends that exceed net income available to common shareholders over the past year[48]. - The FDIC requires certain insured depository institutions with over $50 billion in assets, including Frost Bank, to submit periodic resolution plans, with new amendments effective October 1, 2024[76]. - The Dodd-Frank Act mandates enhanced prudential standards for systemically important financial institutions, requiring a risk committee for bank holding companies with total consolidated assets of $50 billion or more[75]. - The FDIA prohibits undercapitalized institutions from making capital distributions or paying management fees, and requires them to submit a capital restoration plan[65]. - The FDIC has the authority to terminate deposit insurance if an institution is found to be in unsafe or unsound condition[72]. - The FDIC's assessment rates for deposit insurance are based on average total assets minus average tangible equity, with larger institutions subject to performance and loss-severity scores[71]. - The Volcker Rule restricts banks from engaging in proprietary trading and investing in hedge funds, but does not significantly impact Frost Bank's operations[77]. Business Strategy and Growth - Cullen/Frost aims to grow fee-based income and expand through both organic growth and potential acquisitions[20]. - The company evaluates merger and acquisition opportunities to enhance profitability and market presence[20]. - The company serves a diverse range of industries, including energy, healthcare, and telecommunications, without dependence on any single industry[19]. - Cullen/Frost's common stock is listed on the New York Stock Exchange under the symbol "CFR"[37]. Employee and Community Engagement - As of December 31, 2024, the company employed 5,854 full-time equivalent employees, with an average tenure of 9.3 years[105]. - The company was recognized on Forbes magazine's Best Employers list in 2024, reflecting its commitment to employee relations and corporate culture[106]. - The company is dedicated to providing a supportive workplace free of discrimination, promoting equal opportunity for all employees[107]. - In 2024, employees contributed over 24,000 hours to community service activities, reflecting the company's commitment to community engagement[108]. - The company has established a voluntary, employee-led team focused on improving community lives, enhancing employee engagement and satisfaction[108]. Credit and Market Risks - As of December 31, 2024, approximately 82.9% of the loan portfolio consisted of commercial and industrial, energy, construction, and commercial real estate mortgage loans, which are generally viewed as having a higher risk of default[117]. - Commercial real estate mortgage loans comprised approximately 34.5% of the loan portfolio as of December 31, 2024, indicating a significant exposure to credit risk in this sector[120]. - The company had $1.1 billion in energy loans, representing approximately 5.4% of the loan portfolio, highlighting potential volatility risks associated with crude oil prices[121]. - The company is subject to interest rate risk, which could adversely affect net interest income and overall earnings if interest rates on deposits rise faster than those on loans[114]. - The allowance for credit losses is subject to significant estimates and may require increases based on changing economic conditions, which could negatively impact net income[118]. - The company faces liquidity risk, which could be affected by downturns in the Texas economy or adverse regulatory actions[123]. - The company’s credit exposures are concentrated in industries susceptible to long-term risks from climate change and economic disruptions, which could adversely affect financial performance[116]. - As of December 31, 2024, approximately 54% of the company's deposits were uninsured, which poses a risk to liquidity[124]. - The company has experienced significant unrealized losses in its available-for-sale securities portfolio due to rising market interest rates, impacting book capital and tangible common equity[125]. Operational and Technological Risks - The company is subject to operational risks from potential failures in its analytical and forecasting models, which could lead to unexpected losses[126]. - The company has implemented a new residential mortgage product, but there are substantial risks and uncertainties associated with new product offerings[129]. - The financial services industry is undergoing rapid technological changes, and the company's success depends on its ability to adapt to these changes[130]. - Cybersecurity threats remain a significant concern, with potential breaches leading to operational disruptions and reputational damage[138]. - The company relies on external vendors for essential services, which introduces operational and cybersecurity risks[141]. - The company faces risks related to external vendors not performing according to service level agreements, which could disrupt operations and adversely affect financial condition[142]. - The company relies on accurate customer information for credit decisions, and reliance on misleading data could materially impact financial results[146]. Competitive and Economic Environment - Economic conditions in Texas significantly affect the company's profitability, with local market conditions impacting demand for products and customer repayment ability[147]. - The company operates in a highly competitive environment, facing competition from larger banks and fintechs, which may lead to pricing pressures[151]. - Regulatory scrutiny and compliance costs are increasing, potentially affecting profitability and operational flexibility[155]. - The repeal of federal prohibitions on interest payments on demand deposits could increase interest expenses and decrease net interest margins[157]. - Potential acquisitions may disrupt business operations and dilute shareholder value, with risks including exposure to unknown liabilities and asset quality issues[161]. - Regulatory approvals for acquisitions have become more difficult to obtain, which could impede strategic growth opportunities[163]. - The trading volume of the company's common stock is lower than that of larger financial services companies, which may lead to price volatility[165]. - The company has historically declared cash dividends on its common stock but is not obligated to continue doing so, which could negatively impact stock prices[166]. - The company's ability to declare dividends is subject to federal regulatory considerations, including capital adequacy guidelines[167]. - Economic conditions, including inflation and interest rates, are impacting profitability and could affect loan demand and credit quality[171]. - The U.S. government's budget deficit and potential political conflicts may increase the risk of default on government debt, affecting the company's investment securities[172]. - Climate change poses operational, credit, legal, and reputational risks that could adversely impact the company's business and financial condition[184]. - The company may need to raise additional capital in the future, which could be challenging depending on market conditions and financial health[175]. - Stock price volatility may hinder the ability to resell common stock at attractive prices, influenced by various market factors[178]. - Changes in accounting standards could materially impact the company's financial statements and reporting[180]. - The company faces intense competition for skilled personnel, which could affect its operational effectiveness and customer relationships[181].

Core Viewpoint - The article presents a bullish case for Cullen/Frost (CFR), highlighting its high-quality deposit franchise and long-term investment potential [1]. Group 1: Company Overview - Cullen/Frost is characterized by a strong deposit franchise, which is essential for its financial stability and growth [1]. Group 2: Investment Strategy - The investment approach discussed emphasizes a long-term, buy-and-hold strategy, particularly favoring stocks that can consistently deliver high-quality earnings [1].

Core Viewpoint - Cullen/Frost Bankers, Inc. (CFR) reported a strong performance in Q4 2024, with earnings per share (EPS) of $2.36, reflecting an 8.3% increase year-over-year and surpassing the Zacks Consensus Estimate by 8.8% [1][2] Financial Performance - The net income available to common shareholders was $153.2 million, up from $100.9 million in the prior-year quarter [2] - Total revenues for Q4 2024 were $556.4 million, a 6.3% increase year-over-year, exceeding the Zacks Consensus Estimate by 2.3% [4] - For the full year 2024, revenues reached $2.15 billion, surpassing the Zacks Consensus Estimate by 0.9% and increasing by 3.4% year-over-year [4] Income and Expenses - Net interest income (NII) on a taxable-equivalent basis rose 2% to $433.7 million year-over-year, with a net interest margin (NIM) expansion of 12 basis points to 3.56% [5] - Non-interest income improved by 8% to $122.8 million year-over-year, driven by increases in all components except for other non-interest income [5] - Non-interest expenses decreased by 8% year-over-year to $336.2 million, although excluding special surcharge expenses, they increased by 7.2% [6] Loan and Deposit Growth - Total loans as of December 31, 2024, were $20.8 billion, reflecting a 3.5% sequential increase, while total deposits amounted to $42.7 billion, up 2.4% from the previous quarter [7] Credit Quality - Credit loss expenses were reported at $16.2 million, slightly up from $16 million in the prior-year quarter, with the allowance for credit losses on loans at 1.30%, down 1 basis point [8] - Net charge-offs as a percentage of average loans increased by 4 basis points year-over-year to 0.27% [8] Capital and Profitability Ratios - The Tier 1 risk-based capital ratio improved to 14.07% from 13.73% year-over-year, while the total risk-based capital ratio rose to 15.53% from 15.18% [9] - Return on average assets and return on average common equity were 1.19% and 15.58%, respectively, compared to 0.82% and 13.51% in the prior-year quarter [10] Strategic Positioning - The company is well-positioned for revenue growth due to steady improvement in loan balances and a solid capital position, with efforts to expand its presence in Texas markets appearing encouraging [12]

Core Insights - Cullen/Frost Bankers (CFR) reported a revenue of $556.44 million for the quarter ended December 2024, reflecting a year-over-year increase of 6.3% [1] - The earnings per share (EPS) for the quarter was $2.36, up from $2.18 in the same quarter last year, exceeding the consensus EPS estimate of $2.17 by 8.76% [1] - The reported revenue surpassed the Zacks Consensus Estimate of $544.02 million, resulting in a revenue surprise of 2.28% [1] Financial Metrics - Net loan charge-offs to average loans were reported at 0.3%, higher than the four-analyst average estimate of 0.2% [4] - Total earning assets averaged $47.58 billion, slightly above the four-analyst average estimate of $47.44 billion [4] - Net Interest Margin (FTE) was recorded at 3.5%, compared to the estimated 3.6% by four analysts [4] - Book value per common share at the end of the quarter was $58.46, below the three-analyst average estimate of $60.33 [4] - Total Non-Performing Loans/Non-accrual loans amounted to $78.87 million, significantly lower than the two-analyst average estimate of $97.31 million [4] - Total Non-Interest Income reached $122.82 million, exceeding the average estimate of $111.93 million based on four analysts [4] - Net Interest Income (FTE) was $433.73 million, slightly above the four-analyst average estimate of $432.09 million [4] - Other charges, commissions, and fees totaled $15.21 million, higher than the three-analyst average estimate of $12.97 million [4] - Insurance commissions and fees were reported at $14.22 million, compared to the average estimate of $13.60 million based on three analysts [4] - Trust and investment management fees reached $43.77 million, exceeding the three-analyst average estimate of $41.12 million [4] - Net Interest Income was $413.52 million, above the three-analyst average estimate of $410.97 million [4] - Service charges on deposit accounts totaled $27.91 million, surpassing the three-analyst average estimate of $26.48 million [4] Stock Performance - Shares of Cullen/Frost have returned +3.4% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Core Viewpoint - Cullen/Frost Bankers reported quarterly earnings of $2.36 per share, exceeding the Zacks Consensus Estimate of $2.17 per share, marking an earnings surprise of 8.76% [1][2] Financial Performance - The company achieved revenues of $556.44 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 2.28% and showing an increase from $523.66 million year-over-year [2] - Over the last four quarters, Cullen/Frost has consistently surpassed consensus EPS estimates and topped revenue estimates three times [2] Stock Performance - Cullen/Frost shares have increased approximately 3.4% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.03 on revenues of $538.29 million, and for the current fiscal year, it is $8.52 on revenues of $2.16 billion [7] - The estimate revisions trend for Cullen/Frost is favorable, which could influence future stock movements [6][5] Industry Context - The Banks - Southwest industry, to which Cullen/Frost belongs, is currently ranked in the top 4% of over 250 Zacks industries, suggesting a positive outlook for the sector [8]

Financial Performance - Net income available to common shareholders for Q4 2024 was $153.2 million, an increase of $52.3 million or 51.8% compared to $100.9 million in Q4 2023[2] - Fourth quarter diluted earnings per common share for 2024 was $2.36, up 52.3% from $1.55 in Q4 2023[2] - For the full year 2024, net income available to common shareholders was $575.9 million, a decrease of 2.6% from $591.3 million in 2023[4] - Net income available to common shareholders decreased to $575.9 million in 2024 from $591.3 million in 2023, a decline of 2.9%[23] - Earnings per common share (basic) for 2024 was $8.88, down from $9.11 in 2023, reflecting a decrease of 2.5%[23] Income and Expenses - Non-interest income for Q4 2024 was $122.8 million, an increase of $9.1 million or 8.0% from $113.8 million in Q4 2023[8] - Non-interest expense for Q4 2024 was $336.2 million, down $29.1 million or 8.0% compared to $365.2 million in Q4 2023[10] - Net interest income for Q4 2024 was $413,518,000, an increase from $404,331,000 in Q3 2024, reflecting a growth of 0.3%[19] - Net interest income for 2024 increased to $1,604.6 million, up from $1,558.7 million in 2023, representing a growth of 2.5%[23] - Total non-interest income rose to $459.1 million in 2024, compared to $428.5 million in 2023, marking an increase of 7.1%[23] Loans and Deposits - Average loans for Q4 2024 increased by $1.7 billion, or 9.3%, to $20.3 billion compared to $18.6 billion in Q4 2023[5] - Average deposits for Q4 2024 increased by $701.7 million, or 1.7%, to $41.9 billion compared to $41.2 billion in Q4 2023[5] - Total deposits reached $42,723,000,000 in Q4 2024, an increase from $41,721,000,000 in Q3 2024, reflecting a growth of 2.4%[21] - Total deposits as of December 31, 2024, were $42.7 billion, an increase from $41.9 billion in 2023, showing a growth of 1.9%[25] Credit Quality - The company reported a credit loss expense of $16.2 million for Q4 2024, compared to $19.4 million in Q3 2024[10] - The allowance for credit losses on loans increased to $270,151,000 in Q4 2024, up from $263,129,000 in Q3 2024, indicating a rise of 3.9%[21] - Non-accrual loans decreased to $78,866,000 in Q4 2024, down from $104,877,000 in Q3 2024, a reduction of 25%[21] - The allowance for credit losses on loans increased to $270.2 million, up from $246.0 million in 2023, indicating a rise of 9.3%[25] - Non-accrual loans increased to $78.9 million, compared to $60.9 million in 2023, representing a growth of 29.6%[25] Capital Ratios - The Tier 1 Risk-Based Capital Ratio was 14.07% in Q4 2024, compared to 14.02% in Q3 2024, indicating a slight improvement[21] - Common Equity Tier 1 Risk-Based Capital Ratio improved to 13.62% in 2024 from 13.25% in 2023, an increase of 2.8%[25] - The leverage ratio increased to 8.63% in 2024, up from 8.35% in 2023, indicating a strengthening of capital position[25] Shareholder Returns - The board declared a first-quarter cash dividend of $0.95 per common share, payable on March 14, 2025[11] - The company authorized a $150 million stock repurchase program, expiring on January 28, 2026[12] Book Value - The book value per common share at the end of Q4 2024 was $58.46, down from $62.41 in Q3 2024, a decrease of 6.3%[19] - Book value per common share at the end of the quarter rose to $58.46, compared to $55.64 in 2023, reflecting an increase of 3.3%[23]

Core Insights - Cullen/Frost Bankers, Inc. reported a net income of $153.2 million for Q4 2024, an increase of $52.3 million from $100.9 million in Q4 2023, with adjusted earnings per diluted share rising to $2.36 from $1.55 [1][2][15] - The company declared a first-quarter cash dividend of $0.95 per common share and authorized a $150 million stock repurchase program [6][7] Financial Performance - For Q4 2024, net interest income was $433.7 million, up 5.8% from $409.9 million in Q4 2023, with average loans increasing by $1.7 billion, or 9.3%, to $20.3 billion [3][5] - Annual net income available to common shareholders for 2024 was $575.9 million, a decrease of 2.6% from $591.3 million in 2023 [2][17] - The company’s return on average assets and average common equity for Q4 2024 were 1.19% and 15.58%, respectively, compared to 0.82% and 13.51% in Q4 2023 [1][15] Capital and Asset Quality - As of December 31, 2024, the Common Equity Tier 1, Tier 1, and Total Risk-Based Capital Ratios were 13.62%, 14.07%, and 15.53%, respectively, exceeding Basel III requirements [5][16] - The allowance for credit losses on loans was 1.30% of total loans at year-end 2024, with non-accrual loans totaling $78.9 million [6][19] Dividends and Share Repurchase - The board declared a cash dividend of $11.125 per share of Series B Preferred Stock, payable on March 17, 2025 [6][7] - The new share repurchase program allows for the purchase of up to $150 million of common stock over one year, expiring January 28, 2026 [7][8] Operational Highlights - Average total deposits for 2024 were $41.0 billion, down 1.1% from $41.4 billion in 2023, while average total loans increased by 10.7% [4][18] - Non-interest income for Q4 2024 was $122.8 million, an increase of 8.0% from $113.8 million in Q4 2023, driven by higher trust and investment management fees [5][13]